Consumer Confidence Stays Near Record Lows as Gas Prices Ease

A small break at the pump has not fixed the mood

The popular story says Americans are feeling a little better because gasoline has come off its highs. The data available so far does not support that story yet. Pump prices have eased a little. The national average for regular was about $4.49 a gallon in late September34, and it had slipped to roughly $4.33 by mid-October5354. But the latest consumer surveys show confidence still falling, not recovering.

The University of Michigan's preliminary October sentiment index fell to 46.3 from 48.1 in September33. Its measure of current conditions dropped 12.2% to 44.7, the lowest reading on record51. Five of the weakest readings in the survey's 74-year history have come this year51. The Conference Board's September index fell 6.7 points to 81.9, its lowest level since April 2014 and below its worst point during the pandemic31. That reading also missed the consensus forecast of 89 by a wide margin32.

In short, the dip in gas prices is real but small, and there is no sign yet that it has lifted confidence. The Conference Board's October survey, which should show any rebound, has not yet been released. Gas is still more than a dollar above where it was a year ago53. Unless prices fall much further, a modest improvement in sentiment would leave it at historically weak levels.

Why the gloom persists: energy is spreading into other prices

The consumer price index rose 3.7% in the year to September, up from 3.4% in August. Prices rose 0.6% from August alone, the biggest monthly increase in five months29. Gasoline jumped 9.1% in September and accounted for more than half of the monthly increase. It is up 34.2% from a year earlier23. Core inflation, which excludes food and energy, rose to 2.6% from 2.4%, and both the monthly and annual figures came in above economists' forecasts23.

The more worrying sign is in wholesale prices. The producer price index rose 6.3% from a year earlier, its largest increase in nearly four years. It rose 1.3% in September alone, driven by a 20% jump in gasoline38. Diesel averaged about $6.32 a gallon nationally, compared with $3.66 a year ago35. Because trucks, trains and farm equipment all run on diesel, economists expect those costs to work their way into the price of ordinary goods36. Cleveland Fed President Beth Hammack has warned that some businesses are raising prices now to cover costs they expect later, which could be a sign of an inflationary mindset taking hold40.

Consumers expect the same thing. In Michigan's October survey, Americans expected inflation of 4.7% over the next year, up from 3.4% in February, before the Iran war began33. Conference Board respondents expected 6.1% on average32.

Groceries: a brief reprieve

Grocery prices were the one clear bright spot in September. Food-at-home prices fell 0.1% for the month, and grocery inflation slowed to 1.8% from 2.2%30. The decline came mostly from cheaper milk, down 2%, and beef, down 1%28. Moody's economist Mark Zandi linked part of the beef decline to a temporary pause in beef tariffs that President Trump announced in August22.

The relief was uneven. Fruits and vegetables rose 0.5% for the month and are up 3.7% from a year ago, about twice the overall grocery rate30. Restaurant prices rose 3.5% from a year earlier, widening the gap with grocery inflation24.

The wholesale data suggests the break may not last. Wholesale food costs rose 1.2% from August to September, the largest monthly increase since February, and higher transportation costs probably contributed36. CNN and CNBC also noted that expensive diesel could push food prices up in the coming months2122. Taken together, September's cheaper groceries look more like a pause than the start of a trend.

Retail sales: one report, two readings

The September retail sales report shows why coverage of the consumer has been so mixed. Sales rose 0.8% from August, more than forecasters expected36. AP described consumers as having stepped up their spending36, while CNN said spending had slowed from August's 1.3% gain10. Both are accurate. The difference is in what each chose to emphasize.

The details lean toward the weaker reading. Gas station sales jumped 6.4%. Excluding gasoline, retail sales rose only 0.2%, and much of that reflected higher prices rather than more goods bought36. EY-Parthenon estimated that inflation-adjusted retail sales grew just 0.1% in a month when the dollar figure rose 0.8%8. Wells Fargo's Gary Schlossberg calculated that growth over the past three months was running at a 2.4% annual pace, a sign of slowing momentum heading into the holidays10.

The National Retail Federation still expects record holiday sales of $1.01 trillion, up 4.2% from last year4. Forecasters estimate that roughly half of that growth will come from higher prices4. The NRF's chief economist described the economy as K-shaped. Wealthier households are doing much of the spending, and in some retail categories the top 10% of spenders account for up to 70% of sales7. ING's James Knightley pointed to Federal Reserve data showing that households earning $155,000 or more account for about 40% of all spending51. That helps explain how surveys can be so gloomy while total spending holds up. The people driving the totals are not the ones who feel most squeezed.

Incomes are the weak point. Average wages rose 3% over the past year, slower than inflation40. Inflation-adjusted weekly paychecks fell from a year earlier in September36. Employers added only 29,000 jobs in September, far below the roughly 90,000 economists expected36.

Subscriptions add to monthly bills

Recurring charges are also rising. Streaming services raised prices throughout 2026. Disney+ and Hulu increased their ad-free plans by $2.50 to $21.49 a month in September45, their fourth price increase in four years43. Peacock raised every tier by $1 to $3 in August41. Apple TV went up $2 to $14.9941. Netflix's ad-free Standard plan now costs $19.99 and its Premium plan $26.9944. In October, Discovery+ raised prices days after Skydance completed its acquisition of the service48.

One estimate puts a household with four common ad-free services at about $73 a month before taxes46. These increases are small next to the jump in gas prices, but they stack up. The New York Times listed what Americans pay to watch TV among the costs that rose in the latest price report54. In August, prices for wireless phone service also rose31. For households already feeling stretched, every subscription renewal is another reminder of rising costs.

Credit: borrowers are holding up, but young and old are under strain

Credit data is mixed. The Federal Reserve's 30-day delinquency rate on bank credit cards fell to 2.85% in the second quarter, its eighth straight quarterly decline and below the long-run average11. Credit card balances reached a record $1.263 trillion18. Even so, the flow of balances into serious delinquency stayed roughly flat at 6.97%, compared with 6.93% a year earlier20.

The alarming headline numbers come from a different calculation. The New York Fed's stock measure, which shows 12.8% of balances 90 or more days past due, includes old charged-off debt that lenders now report for longer15. Measures of new delinquencies give a more accurate picture of current stress. On that basis, the problems are concentrated in specific groups rather than spread across all borrowers.

Those groups are the ones to watch. Serious delinquency transition rates reached 10.1% for borrowers aged 18 to 29, close to levels last seen around 2010. For borrowers 70 and older they reached 6.3%, a 15-year high18. Serious auto-loan delinquency also edged up20.

Interest costs are rising as well. The average credit card APR on accounts that charge interest is 22.36%11. The Fed raised rates in September for the first time since 202331, and after the CPI report traders put the odds of another increase in October at about even53. Nationwide's Kathy Bostjancic expects consumers to keep spending as long as they have jobs, but to rely more on savings and credit to do it36. With the personal saving rate at 4.1%, compared with a 7.3% average in 2019, there is not much savings left to draw on3.

The bottom line

At this point, the claim that consumer confidence is recovering is ahead of the evidence. Gas prices have eased modestly, and grocery prices offered brief relief in September. But inflation is speeding up, wholesale prices point to more increases ahead, and paychecks are not keeping up. Spending is still holding up, largely because wealthier households keep buying and employers have avoided layoffs. Higher borrowing costs and rising delinquencies among the youngest and oldest borrowers show where that support is weakest. Any rebound in the October surveys should be read as a small improvement from very low levels, not a turnaround.